2016 (4) TMI 1154 - AT - Central Excise

Cenvat credit - availed on MS Angles, MS Plates, MS channels, MS Beams, HR sheets/coils etc. - MS items used for repair and maintenance of plant and machinery - also used for re-conditioning of worn out equipment and erection /fabrication of new equipment and connected ducting within the factory of production - Held that - by following the dictum of judgments of Hon ble High Court in the case of CCE & Cus. Visakhapatnam Vs Rashtriya Ispat Nigam Ltd 2011 (4) TMI 1098 - ANDHRA PRADESH HIGH COURT held that credit on steel sheets and coal used in repair and maintenance of capital goods in the factory of manufacturer is admissible, the judgment of Hon ble Apex Court in the case of Ramala Sahkari Chini Mills Ltd Vs CCE, 2010 (11) TMI 34 - SUPREME COURT OF INDIA , wherein the issue whether credit is admissible on welding electrodes used for repair and maintenance doubted the interpretation of inputs rendered in the case of Maruthi Suzuki Ltd and referred the matter to the Larger Bench. The Hon ble Larger bench of Apex Court in Ramala Sahkari Chini Mills Ltd case 2016 (2) TMI 902 - SUPREME COURT answered the reference observing that the word includes used in the definition does not have a restrictive meaning, the credit availed on MS items used for repair and maintenance of plant and machinery is admissible. - Decided in favour of appellant

Summary

Issues:
1. Disallowance of credit availed on MS items used for repair and maintenance.

Analysis:
The appellant, engaged in cement and clinker manufacturing, availed Cenvat credit on MS items for repair and maintenance, but faced disallowance. The original authority disallowed the credit, imposing penalties and confirming a demand. The Commissioner (Appeals) upheld this decision, leading to the present appeal.

The appellant argued that the MS items were crucial for manufacturing capital goods and for repair and maintenance activities, essential for continuous manufacturing operations. They highlighted that without these items, breakdowns and interruptions in manufacturing would occur. Citing various judgments, the appellant contended that the credit availed was proper and correct.

On the contrary, the respondent argued that MS items did not fall under the category of inputs as per the Cenvat Credit Rules, 2004. They emphasized the distinction between repair and maintenance activities and manufacturing, supporting the disallowance of credit on MS items.

The issue before the Tribunal was whether the credit availed on MS items for repair and maintenance of plant and machinery was admissible. Referring to legal precedents, the Tribunal noted that credit on steel sheets and coal used for repair and maintenance of capital goods was deemed admissible. The Tribunal also highlighted a Supreme Court case regarding the interpretation of 'inputs,' concluding that the word 'includes' in the definition was not restrictive. Based on these judgments, the Tribunal held that the credit availed on MS items for repair and maintenance was admissible.

Consequently, the impugned order disallowing the credit was set aside, and the appeal was allowed with any consequential reliefs.